Josefina Lopez

I. Facts and Summary of Pleadings

A. Background On August 11, 2021 (the “Petition Date”), Josefina Lopez (the “Debtor”) filed a voluntary Chapter 7 petition. Eric Bejar and Christina Bejar (the “Bejars”) are the Debtor’s largest creditors. The Bejars’ claim against the estate arises from a vehicular accident between the Debtor’s car and a motorcycle ridden by patrolman Eric Bejar. On September 18, 2017, the Bejars filed a personal injury action against the Debtor in the Los Angeles Superior Court (the “State Court Action”). On March 22, 2021—approximately five months prior to the Petition Date—the Debtor received $62,500 from her insurer, Victoria Fire & Casualty Company (the “Insurer”), in exchange for agreeing not to pursue against the Insurer a claim for bad-faith failure to settle within policy limits (the “Bad Faith Claim”). The agreement between the Debtor and the Insurer was memorialized in a Confidential Settlement Agreement and Release (the “Prepetition Settlement Agreement”).3 Among other things, the Prepetition Settlement Agreement states that the Debtor “hereby represents to the Insurer, as a material term of this Agreement, that she intends to file for personal…